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Chinese Trade Deal to Be Signed in Coming Weeks

Brian German Agri-Business, Trade

Chinese trade deal

The first part of a Chinese trade deal that officials are hoping to see foster better relations between the U.S. and China moving forward, is set to be signed on January 15.  The initial agreement is the first major breakthrough since negotiations first began 18 months ago. President Donald Trump noted that once the Phase One agreement is signed then the administration will continue working to facilitate a more favorable relationship between the two counties.

“I will be signing our very large and comprehensive Phase One Trade Deal with China on January 15. The ceremony will take place at the White House. High level representatives of China will be present. At a later date I will be going to Beijing where talks will begin on Phase Two!,” President Trump said in a Tweet.

The initial announcement that a preliminary deal with China was announced on December 13, which came with the suspension of a scheduled tariff increase on $160 billion of Chinese imports. The details of the agreement have yet to be released, but U.S. Trade Representative Robert Lighthizer has indicated that the precise terms will be released once the accord is signed. Expectations under the Chinese trade deal are between $40 billion and $50 billion in U.S. farm products to be purchased. Markets have had a positive response to the news that tensions between the U.S. and China are beginning to soften, with soybean futures rising last week to their highest price since June 2018.

Despite the positive momentum in the trade negotiations between the U.S. and China, there is some skepticism among industry experts as to exactly how much China will truly purchase as part of the agreement.  Historically, American agricultural exports to China have never been more than $26 billion in any single year.  With China looking to other markets to fulfill demand in response to the increased U.S. tariffs over the last year and a half, there is some doubt for reaching the $40 billion mark.

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Brian German

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Ag News Director, AgNet West